Medical schemes are worried the country may be moving toward an environment of greater regulation of medical care pricing. This follows the release of the annual report of The Council for Medical Schemes (CMS) early September.CMS chairman Professor Yusuf Veriava writes in his report of the introduction of prescribed medical benefits (PMBs) in 2004 and how the intention to provide access to basic and adequate healthcare had been overthrown by the 2010 High Court judgment that set aside the National Health Reference Price List (NHRPL) regulations.“Controversial as they are, PMBs remain the perfect mechanism to link the future National Health Insurance (NHI) system with the private healthcare financing industry,” he wrote.Jill Larkan, Head of Healthcare Consulting at GTC Cape Town says the recent suggestion by the Minister of Health on PMBs appeared to be against the goal of providing basic care to all South Africans. The minister has suggested that the treatment of the 270 medical conditions and 25 chronic conditions covered under PMBs be charged at medical scheme rates rather than at cost.“When/if this happens, those no longer able to fund their private healthcare (previously funded by their medical aid at cost), will be called upon to pay the difference due to the specialists/providers, to cancel or reduce their medical aid, or to move to a plan more suitable or affordable given their anticipated extra expenses. Once these members move out of the private healthcare system, they will revert to being reliant on the state system and, in so doing, will be overburdening a system that’s already buckling under the strain.“This, in addition to the medical aids negotiated networks already in place, makes little sense.” Many patients, both those on Non-Network plans and those who are not on a medical aid, could be prejudiced, considering that some schemes have preferential rates with providers. Non-network and non-medical aid members could therefore be subject to fees higher than their more privileged counterparts who enjoy a preferential rate.“The question is this: Is this the minister’s first entry point into telling medical professionals what they may charge in future? The minister could argue that the profession is prone to over-charging members and move to set the price for treating all conditions.”Larkan says that such a move could be positive for medical schemes, as they would then be in a better position to account for direct costs, particularly the smaller ones that do not have the same negotiating power as their bigger competitors. Lower costs for PMBs would also be beneficial to medical aid members as they could enjoy lower premiums.“It may not, however, be beneficial to PMB sufferers at all, nor for their treating doctors, hospitals or Disease Management organisations.”The PMBs constitute a significant portion of all medical expenses - amounting to R53 billion in 2014, or 52% of the total risk benefit. “This is an enormous cut of the total medical spend, and sadly, for many, conditions are related to unhealthy lifestyles, and therefore avoidable. Diagnosis and treatment place a huge burden on medical schemes and on the country,” Larkan says.There is little doubt that the private healthcare industry is in a state of flux. The moves by the minister, the rollout of the National Health Insurance system, PMBs and market enquiry by the Competition Commission, are all contributing to a deep sense of uncertainty.The CMS annual report reflects some of the changes in the industry, with a decline in the number of medical schemes, pointing to ongoing consolidation, as smaller providers are swallowed up or falter.“Schemes have to become more competitive. One way this could be achieved is if the medical aid schemes were able to secure network agreements that could help them offer better rates, as well as lower premiums,” Larkan addsThere is certainly space for growth in the industry as the number of members grew by only 0,4% in 2014 to little more than 3,92 million individuals, providing cover for a total of 8,81 million people. Larkan does suggest, however, that some form of regulated pricing could help to stabilise some of the industry, by offering greater transparency.